No one will be charged in transit ticket scandal

There will be no charges laid in connection with more than $800,000 in missing ticket transit money, Greater Sudbury Police Chief Frank Elsner revealed at city council Tuesday night.

Elsner, citing a letter from the OPP, which conducted the investigation, said once the city failed to demand its money and allowed the debtor time to repay them, it was no longer a criminal case.

“Once you get into a business relationship with someone, and they don't pay you back ... and you don't take them to task right at the time that it happens, it's considered that you've extended them credit,” Elsner told reporters. “As soon as you do that, you've extended them credit and no longer have the opportunity to go before the courts.

“You can still sue them, but as a criminal offence, it no longer applies.”

Quoting from a letter sent to him from the OPP, Elsner said there was evidence of a lack of oversight on the part of the city, but not criminal activity.

“On two occasions, the City of Greater Sudbury extended the expired contract with the vendor for a 12-month term, knowing that the vendor was in arrears in excess of $200,000,” Elsner said, quoting the letter. “The police investigation has revealed there is evidence of poor business practices and a lack of management oversight.

“We have concluded that reasonable grounds do not exist that the vendor committed any criminal offence.”

When asked why it took the OPP more than a year to come to that conclusion, Elsner said they took the case as a courtesy to Sudbury, and were swamped by other investigations.

“They had a number of competing interests,” he said. “And they're overtaxed as it is.”

Greater Sudbury Mayor Marianne Matichuk said a host of new procedures have been brought in to make sure this never happens again, and to restore public trust.
“There haven't been any secrets that there were poor business practices from Day 1,” Matichuk said. “You have to have policies and procedures in place so ... there's checks and balances.

“We want to make sure those things are there, so this doesn't happen again.”

While efforts will be made to recover the $500,000 still owed to the city, Matichuk said the episode serves as an expensive lesson for everyone at the municipality. To their credit, she said city council was determined for the facts to come out as soon as the scandal emerged in 2011.

“It did come out, it was not hidden,” she said. “And a lot of councillors pushed for that, that we wanted this out in the open and we wanted to fix it.
“I think we need to learn and move on. Sometimes you have to learn. It's an expensive lesson.”

While she couldn't say whether any city employees have been disciplined, she did say that steps have been taken.

“We cannot speak about those things in public,” she said. “I can tell you measures have been taken, action has been taken.”

The transit investigation began after a 2011 review by city auditor Brian Bigger revealed that, among other issues, transit management continued to renew contracts with 1211250 Ontario Inc., which operated the transit kiosk, the transit café and the airport café, despite the fact its debt with the city continued to grow year after year.

The city renewed its contract with the company June 1, 2004, when it owed $262,206. That contract ended Jan. 31, 2006, at which point the company owed the city $340,845. The city then entered into a year-to-year contract with the company for three years.

The company owed $333,962, $504,252 and $824,025 respectively from 2007 to 2009. The contract was terminated Sept. 4, 2009, with the company still owing the city $866,537. At its peak, the company owed the city more than $1 million.

Between January 2004 and September 2009, the majority of kiosk management fees (70 per cent) were paid personally to the director of the company, Tony Sharma, who was paid $533,506.

Additionally, where there was space to indicate the name of the person to whom the cheque should be made payable, the name Zio's Cafe (owned and operated by the director of the numbered company) was crossed out by hand and in handwriting it was indicated that the cheque should be made payable to one of the directors of the company personally.

The cheques were even deposited directly into a personal bank account, rather than an account for the company.

Hopes for progress into the investigation were raised at a city council meeting in June 2012, when Elsner said the OPP’s investigation into the provincial Ornge scandal delayed the transit probe.

Officers working on the case had switched over to look at problems at the provincial air ambulance service, delaying the Sudbury investigation. Officers came to Sudbury last June, the last time there was official word on what was going on with the investigation until Elsner's announcement Tuesday.

Dan Melanson, head of the Greater Sudbury Taxpayer's Association, said while they can't say anything publicly, he'll be watching to see if anyone loses their job over the scandal.
He said it's long been known that it was “the incompetence of city managers” that led to the problem.

“Council said all along they wanted to get the police investigation out of the way before they took any action,” Melanson said. “Well, the police investigation is out of the way.

“If the city wants to instill confidence in the public that this is never going to happen again, they're going to have to do more than say, well, we brought in some controls and now we're going to be doing what we should have been doing back then.”